Maine GOP delays health insurance exchange until court ruling on Obama plan

Posted March 02, 2012, at 6:45 p.m.
Last modified March 03, 2012, at 9:30 a.m.

AUGUSTA, Maine — Republicans have hit the brakes on setting up the state health insurance exchange mandated under President Barack Obama’s controversial health reform law.

They’ll wait until the U.S. Supreme Court rules on the constitutionality of the law this summer before forging ahead, said Sen. Rod Whittemore, a Republican from Skowhegan who is chairman of the legislative committee tasked with establishing an exchange.

States are mandated to set up the exchanges, designed to serve as marketplaces for businesses and consumers to shop for health insurance, by 2014. States that don’t will have to hand the reins over to the federal government.

Rather than run the risk of the feds stepping in to set up Maine’s exchange, the Republican majority on the committee is sketching out a “bare bones” system that would kick in only if the Affordable Care Act survives the court challenge, Whittemore said.

Twenty-six states, including Maine, are challenging as unconstitutional the ACA’s requirement that nearly all Americans purchase health insurance by 2014 or pay a penalty. The U.S. Supreme Court is expected to issue a ruling in June.

That leaves Maine about six months to get its exchange in order. States have until Jan. 1, 2013, to create exchanges that are up to federal snuff.

In the event the federal law is scrapped, Maine consumers already will save money on health insurance under the Republican-led state health reform law passed last year, Whittemore said.

“An exchange really is going to do very little and in fact do nothing in the way of reducing the cost of insurance,” he said.

The expansion of coverage, generous benefits and health insurance subsidies under the ACA ultimately will cost taxpayers more, he said.

Fourteen states, including Vermont and Massachusetts, already have set up their exchanges, while nine others have yet to begin the process. Maine falls into the majority that are studying their options, according to the Kaiser Family Foundation.

Maine won $6 million from the federal government in November to begin designing its exchange, and was part of a five-state consortium awarded $36 million for early innovations in the process. Maine also won a $1 million planning grant in 2010, the only award so far that has been spent.

Two bills that would establish a state exchange, one sponsored by Democrats and the other by Republicans, have stalled in the Legislature’s Insurance and Financial Services Committee.

On Thursday, Whittemore attended a meeting with Gov. Paul LePage to discuss the new approach, he said. Also present were Anne Head, commissioner of the Department of Professional and Financial Regulation, which oversees the Bureau of Insurance; Joel Allumbaugh, health care policy director for the conservative Maine Heritage Policy Center; and Michael Cianchette, deputy counsel to the governor, Whittemore said.

Democrats have accused Republicans of foot-dragging on the two bills.

“The Republicans shouldn’t be playing chicken with the federal government,” Rep. Sharon Treat of Hallowell, sponsor of one of the exchange bills and the lead House Democrat on the committee, said in a statement. “We need to take action on this now. The sooner we get started with planning our own exchange, the sooner Maine people will benefit.”

Under the ACA, a family of four in Maine earning the median income of $46,000 a year could get a tax credit of up to $10,000, which would cover nearly 80 percent of their health care costs for the year, the statement noted, citing the Kaiser Family Foundation’s tax credit calculator.

Both of the bills propose setting up an independent health exchange funded by an assessment on insurers. But Democrats and Republicans differ on oversight of the exchange.

Whittemore said the new strategy involves stripping out some elements of the Republican bill, but declined to be more specific.

Also in play is a set of recommendations crafted last year by a nine-member advisory panel appointed by LePage which proposed housing the exchange within a state department rather than establishing it as an independent agency.

As for the state reform law, Democrats vehemently disagree with Republicans on its impacts. They argue the law, known as PL 90, creates winners and losers in Maine’s health insurance market.

Passed last spring in the wake of heated partisan debate, PL 90 overhauled the health insurance market for about 40,000 people who buy coverage through the individual market or through employers with fewer than 50 workers.

An independent report found that under PL 90 older Mainers living in rural areas will pay more for health insurance, while many others will see lower rates.

Whittemore said he hoped to talk next week with Treat and Cumberland Democrat Sen. Joseph Brannigan, who also serves on the insurance committee, to discuss the Republicans’ health exchange plan. The full committee is expected to convene again next Wednesday.

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